Cable Girds for Another Challenging Upfront Season

Digital Plans Changing Conversations Between Buyers and Sellers

NEW YORK (AdAge.com) -- Cable upfront selling dragged into late summer last year as too many cablers vied for too few ad dollars, ending flat to 2% below the $6.5 billion taken in during 2005's upfront. So it's no wonder cable networks were out early and often with their sales pitches this year.
Jim Perry, head of ad sales for MTV Networks' Kids and Family cluster, said: 'The upfront grew dramatically last year in terms of digital money.'
By the end of the month, Turner Entertainment, Nickelodeon, Scripps and two of NBC's three cable networks will have held their upfront events. Oxygen invited media buyers to hear about its offerings way back in January, and was followed by SoapNet and Cartoon Network in February.

Faster than last year?
Budgets are being finalized, and development meetings between agencies and networks will continue throughout the next few weeks. But that's no guarantee this year's cable upfront will move any faster than last year's. Inability to nail down concrete plans for digital strategies was blamed for the slow pace of last year's upfront -- the buying and selling period for ad dollars on TV -- and execs from Viacom, NBC Universal and others remain unclear on whether this year's deals will get off the ground any earlier.

Jim Perry, head of ad sales for MTV Networks' Kids and Family cluster, which includes Nickelodeon, said: "The upfront grew dramatically last year in terms of digital money. This year we expect to see a dramatic amount of increase as well. Most of the deals now are convergent, multiplatform deals. More often than not, people are looking to move both at the same time. I think there will be a greater involvement this year."

That may be easier said than done, however. Digital strategies are still in flux in terms of a decisive format for ads: pre-roll, banner, post-roll -- no one can decide. And how does that fit in with the ads that appear on network? "You can get video ads every day," said another veteran cable ad-sales exec. "How do you sell a show? If you sell 'The Office' and get two million viewers with only one ad, it's totally different math than if you were on network."

Trying to figure out how to sell digital assets has changed the conversations between buyers and sellers.

"To a degree, we're moving away from [cost-per-thousand] conversations and into engagement discussions," said Hank Close, president-ad sales for MTVN. "I have also seen an increasing trend for digital investment to drive TV spend. We've heard a lot about engagement and transference, but we've got a connection with our audience that is not rivaled by many."

Another key exec close to cable negotiations both this year and last said: "Everybody's saying they're digital and have 360 [degree] opportunities. But what advertisers and agencies are looking to see at the time of negotiation is deliver something of value back to them as well as the 360 ideas at the time of the marketplace."

Digital growth
Broadband and streaming video boosted digital growth for both cable and networks last year, but video on demand is still a hurdle, with its three- to four-week lead times and restricted inventory.

The changed marketplace has shifted how cable approaches its own on-network inventory. As recently as three years ago, there was pressure to sell 60% of inventory during the upfront sales season, but that has changed, said Bill Abbott, exec VP-ad sales for Hallmark Channel. "The need and fear factor that exists of targeting and pegging a certain amount of inventory definitely waned as the scatter market has become bigger. There's less of that impetus for cable in particular to sell to a certain level to be considered successful. There isn't that crazed mentality; it's more of a fear factor."

Upfront deals, cable execs hope, will start to kick in around mid-April. "There will continue to be a lot of the majority market that will continue to transact during the traditional upfront," Mr. Perry said. "There's still a high need to secure inventory during the fourth quarter pre-Easter, and for back-to-school. That won't change." Nickelodeon, for one, sold 80% of its fourth-quarter inventory during the upfront as marketers secured time to sell around the holidays.

New approach to presentations
What has changed already is the approach to the upfront presentation. Turner labeled its TBS, TNT and Court TV event a "brand and programming summit." The MTV entertainment nets are doing away with their traditional concert-and-programming blowout and dividing their properties into three separate brand roadshows to more accurately reflect their recently restructured sales team.

Even mid-tier nets with big ratings stories to tell this year, such as Bravo and Hallmark, are hosting more-intimate dinners as opposed to programming bonanzas.

"Gone are the days where you have a big party where you have Sheryl Crow play or Charlton Heston speak," said one key cable ad-sales chief. "Across the board you're going to see the difference of getting content in front of people and the opportunity you've created around content. It's always nice to say thank you for the business and entertain somebody, but you're still looking to get the selling message out, not just have a party."

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Andrew Hampp

Andrew Hampp covers cable TV, out-of-home and radio for Ad Age, with additional coverage of music in marketing. He is also a regular contributor to Madison + Vine, the branded entertainment newsletter that ships every Thursday. Andrew is always looking for untold trend or case study stories from the out-of-home and radio industries, and welcomes table-side meetings with people in these sectors to discuss how their work can fit into his coverage. He prefers contact by e-mail, but can also be reached by phone.